Monthly Archives: July 2014

Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious, ethnic, or military communities, the elderly, or professional groups, by pretending to be or actually being a member of such groups. Affinity fraudsters seek to manipulate the trust, friendship, and esprit de corps found in close-knit groups and use it to their advantage to sell fraudulent investments. In some cases, affinity fraudsters even enlist respected community, religious, or military leaders from within a group to spread the word about a scam and convince other members that a fraudulent investment is legitimate.

For more information about affinity fraud, read more here, here and here.

Mediation is an informal, voluntary process in which a neutral (i.e., the mediator) chosen by both parties facilitates negotiations between the disputing parties. Unlike arbitration, mediation is not considered binding. If the parties agree to mediate, they will not give up any right to arbitrate or litigate if they are unable to agree and come to a satisfactory conclusion.

The term neutral as used in terms of FINRA arbitrators and mediators, refers to a mutually agreed upon impartial intermediary that has no financial, official, or personal interest in the investment dispute over which the parties are being requested to proceed. FINRA Rule 12405(a) states the type of disclosures a FINRA arbitrator must make if there are circumstances which might preclude the arbitrator from rendering an objective and impartial determination in the proceeding.

Arbitration is a form of alternative dispute resolution in which consists of a hearing and the determination of a dispute or settling of differences between parties by a person or panel of people mutually agreed upon by the parties. In terms of arbitration relating to investment disputes, FINRA has a specific arbitration process by which investors are able to have their investment disputes against their brokers or dealers heard and resolved by an arbitrator or panel of arbitrators. The results of arbitration are binding on both parties.

For more information about the FINRA securities arbitration process, read more here.

BrokerCheck is a free publicly accessible FINRA database that allows investors to research the educational and professional backgrounds of current and former brokers and brokerage firms registered by FINRA. BrokerCheck includes information such as current licensing status and history, employment history, and, if any, reported regulatory, customer dispute, criminal and other relevant matters. It is a useful tool for all potential investors to use before making any investment decisions with a particular broker or brokerage firm.